Findings Of Fact Louis S. Wooten, Sr. is a registered real estate broker holding license No. 0098381. Louis S. Wooten, Sr. did business at the times involved in the administrative complaint as Lou Wooten Realty. Adequate notice of this hearing was given Louis S Wooten, Sr. in the manner required by Chapter 120 and Chapter 475, Florida Statutes. Evidence was received concerning deposits and withdrawals by Louis S. Wooten, Sr. from the Louis S. Wooten, Sr. escrow account in Peoples First National Bank, Miami Shores, Florida, between August 1, 1975 and November 10, 1975, when this account was closed. These records were identified by John Fortnash, vice president of the bank. These records included the ledger for this account from May, 1975 to November, 1975, (Exhibit 1), the ledger from November, 1975, until November 1976, (Exhibit 2), the signature card showing Louis S. Wooten to be the only person authorized to draw on the account, (Exhibit 3), and sixteen (16) individual deposit slips received as Composite Exhibit 4. These records show no activity in the account subsequent to December 23, 1975, when this account had a balance of $22.00. Thereafter, the balance of this account decreased by $2.00 per month, a service charge, until November 10, 1976, when the balance reached zero and the account was closed. Concerning Count 1, Yvard Jeune and Rosita Jeune contracted on or about September 26, 1975, to purchase certain real property from Eddie Silver for $28,500. The Jeunes paid $100 as an initial deposit to Lou Wooten, Sr., and agreed to pay an additional $1,900 for a total deposit of $2,000. This additional $1,900 was paid to Lou Wooten Realty by manager's check on or about September 30, 1975. This manager's check was identified by Barry Eber, chief savings and loan officer for First Savings and Loan of Miami, and received as Exhibit 5. The Jeune contract was contingent upon FHA financing for the Jeunes. FHA financing was not approved, and the Jeunes requested return of their $2,000 in accordance with the terms of the contract. The Jeunes never received their money from Louis S. Wooten, even though they eventually brought suit against Wooten and obtained a judgment against him. The records of Wooten's escrow account do not show the deposit of the $1,900 received from the Jeunes. Regarding Count 2, on or about October 19, 1975, Emma Crockett made an offer to purchase certain real property and paid an earnest money deposit to Lou Wooten Realty in the amount of $1,000 which was receipted for by Mollie Johnson. Mollie Johnson identified the receipt signed by her and testified that this money was duly delivered to Lou Wooten. Subsequently, Crockett's offer of $29,500 was rejected by the seller, and on December 24, 1975, a demand was made for return of the deposit. The cancellation mark on the check, identified by Crockett and received as Exhibit 24, indicates that it was received by Wooten Realty. Crockett's deposit was never returned to her by Wooten. As noted above, the Lou Wooten escrow account was closed with a zero balance. Regarding Count 3, George D. Pratt, Jr. and his wife, Eloise, contracted to purchase certain real property from Gladys P. Smith on or about December 5, 1975. The Pratts paid an initial deposit of $100 to T.F. Chambers and subsequently paid an additional $665 in the form of a manager's check to Lou Wooten Realty. This manager's check was identified by Barry Eber, chief savings and loan officer, First Federal Savings and Loan of Miami, and received as Exhibit 6. Harriet Pooley, an employee of Lou Wooten Realty, identified a receipt to George D. Pratt, Jr. and Eloise in the amount of $665 which was received as Exhibit 18. A review of the ledgers of the Louis S. Wooten, Sr. escrow account indicates no deposits were made to this account subsequent to November 26, 1975. Regarding Count 4, Bettye Green paid Lou Wooten Realty a deposit of $150 on a transaction in which she and her husband offered to purchase real property owned by the Fidlers. The Greens defaulted on the contract, and were advised by their salesman, T.F. Chambers, that their deposit would be forfeited. No evidence was introduced by the Florida Real Estate Commission regarding any demand on the Fidler's behalf for the money. Regarding Count 5, Mary Redfield, a friend and representative of Goldie Brown and Bernard Brown, identified a copy of a manager's check earlier identified by Barry Eber, chief loan officer of First Federal Savings and Loan of Miami and received as Exhibit 7, as a copy of an original check for $1,500 given to her by Goldie Brown which was deposited to Wooten's escrow account. Redfield also identified a contract, Exhibit 16, and a closing statement, Exhibit 17, as documents given to her by Goldie Brown. T.F. Chambers was the salesman who handled this contract. Chambers appeared at closing, after having purchased Lou Wooten Realty from Louis S. Wooten, Sr.Chambers stated that the Wooten escrow account lacked sufficient funds to permit closing the transaction and that he had personally paid for a cashiers check in the amount of $680, the amount necessary to close the purchase. Chambers identified this check which, as a part of Exhibit 21, was received into evidence. Regarding Count 6, Alladar Paczier, counsel for Istvan and Julia Beres, identified a deposit receipt contract for a bar and restaurant (Exhibit 26) and a receipt for a $3,500 deposit signed by Louis Wooten (Exhibit 27). Paczier represented that Wooten failed to produce the deposit money at closing, and that when demand was made by Paczier of Wooten for the deposit, Wooten stated to him that he did not have the money.
Recommendation Based upon the foregoing findings of fact and conclusions of law, the Hearing Officer recommends that the Florida Real Estate Commission revoke the registration of Louis S. Wooten, Sr. DONE and ORDERED this 17th day of January, 1978, in Tallahassee, Florida. STEPHEN F. DEAN Hearing Officer Division of Administrative Hearings Room 530 Carlton Building Tallahassee, Florida 32304 COPIES FURNISHED: Joseph A. Doherty, Esquire Florida Real Estate Commission 400 Robinson Avenue Orlando, Florida 32801 Louis S. Wooten, Sr. 743 Fairlawn Drive Sebring, Florida 33870
Findings Of Fact The Applicant The Applicant is a Trust (the "Trust") to be formed by settlors Sara Kardonski de Nahmad and Raquel Kardonski de Gilinski. Mark Kardonski is to be designated as the trustee pursuant to the proposed trust agreement. The sole beneficiaries of the trust are Sara Kardonski de Nahmad, Raquel Kardonski de Gilinski, Henry Kardonski and Mark Kardonski. All of the beneficiaries are brothers and sisters. The Trust will acquire 100 percent of the stock of Towerbank Corporation. Towerbank Corporation owns 100 percent of the stock of Key Biscayne Bank and Trust Company, Key Biscayne, Florida. Thirty-three percent (33 percent) of the shares of stock to be acquired by the Trust (33,333 shares) will be transferred to the Trust by an existing trust known as the Walter Kardonski Family Trust. The current trustee of the Walter Kardonski Family Trust is also Mark Kardonski and the beneficiaries are the same as under the Trust; Sara Kardonski de Nahmad, Raquel Kardonski de Gilinski, Henry Kardonski and Mark Kardonski. The terms and provisions of the Trust as they relate to voting control of stock held by the Trust and disposition of the stock of Towerbank Corporation are identical to the terms of the existing trust known as the Walter Kardonski Family Trust. The Trustee Mark Kardonski is a Panamanian citizen who is a resident of the United States. He lives at 3 Grove Isle Drive, Apartment 1005, Miami, Florida. He is 35 years old and not married. Mark Kardonski has a Bachelor's Degree in Business Administration from Boston University and a Master of Arts from the University of Lancaster, Lancaster, England, in International Relations. Mark Kardonski is currently employed in the lending department of the Bank where his daily activities are to visit and contact prospective loan clients, to book quality loans, and to review the performance of the loans. He is also a member of the credit committee and sits in on the meetings of the trust committee of the Bank. Mark Kardonski has banking experience with banks other than the Bank. First, Mark Kardonski worked from 1980 to 1981 at State Street Bank in Boston in their training program and then worked in their international operations department. In 1984, Mark Kardonski joined Towerbank International as a credit analyst and later became a credit officer. In 1986 he joined the executive committee of Towerbank International in Panama. His employment with Towerbank International continued until 1987, at which time he became a director of Towerbank International. He continued as a director until 1992. Mark Kardonski also has other business experience outside of banking. In 1981, he worked with the family-owned wholesale electronics business as a marketing manager and designed the marketing strategy for the company and established a distribution system. For the period from 1987 through 1990, Mark Kardonski was employed by Peikard Miami, Inc. He was responsible for converting a purchasing office for the company in Miami to an export trading company specializing in trade in the Caribbean. He was also responsible for hiring professional management, designing the planning strategy for the company and designing their systems. Mark Kardonski's Reputation Mr. Simoneaux is the Executive Director of the International Banking Operations Association with 94 member banks in Dade and Broward Counties. Mr. Simoneaux worked in banking and finance for 36 years prior to his recent retirement. Mr. Simoneaux testified that during the period when Mark Kardonski has owned a controlling interest in Towerbank Corporation as trustee of the Walter Kardonski Family Trust, the impression in the banking community is that the Bank is conservative and that the Bank has received plaudits for outstanding operations, capital and profits. This is also Mr. Simoneaux's opinion. Mr. Simoneaux described Mark Kardonski as being of good moral character, with "both feet on the ground" in banking, with a great deal of understanding of how the Treasury Department of a bank operates, how the bank's funds must be utilized, and investment rates and income. Mr. Simoneaux believes that Mark Kardonski is qualified by reputation, character, experience and financial responsibility to control and operate a bank in a legal and proper manner. Mr. Chopin testified that Mark Kardonski is generally regarded as a person of high character and integrity with a reputation for being a man of principle. He is a scrupulously careful, conservative business person. Mr. Chopin believes that Mark Kardonski is qualified by reputation, character, experience and financial responsibility to control and operate a bank in a legal and proper manner. Mark Kardonski testified that he has never been convicted or pled guilty or nolo contendere to a violation of Section 655.50, Florida Statutes, relating to Florida Control of Money Laundering in Financial Institutions Act, Chapter 896 relating to offenses relating to financial institutions, or any similar state or federal law. Effect of the Acquisition on the Bank Mark Kardonski testified that the strategy of the current owners of Towerbank Corporation has been to hire professional management to run the Bank consistent with a philosophy of safe and sound banking, with a conservative approach to lending and investing in high quality, high grade investments. The strategy of the Bank includes encouraging management to get involved in community affairs of Key Biscayne and Dade County and to participate in cultural events and activities in Key Biscayne. Mark Kardonski is pleased with the performance of current management in implementing these strategies for the Bank. No changes in the senior management of the Bank, including the chief executive officer are planned at this time. The Applicant plans to continue the current business strategies utilized by the current ownership. The Applicant plans to continue the approach of focusing its attention on strategy at the Board of Directors level and allowing management to run the day-to-day operations of the Bank. DONE AND ENTERED this 24th day of June, 1993, in Tallahassee, Leon County, Florida. MICHAEL M. PARRISH Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of June, 1993. COPIES FURNISHED: Albert T. Gimbel, Esquire Jeffrey D. Jones, Esquire Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350 Thomas R. Woolsey, Esquire STEEL, HECTOR & DAVIS 200 South Biscayne Boulevard Suite 4000 Miami, Florida 3313 Gerri Raines Dolan, Esquire DELOITTE, HASKINS & SELLS 100 Southeast 2nd Street Suite 2500 Miami, Florida 33131-2335 Honorable Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Florida 32399-0350 William G. Reeves, Esquire General Counsel Office of the Comptroller The Capitol, Suite 1302 Tallahassee, Florida 32399-0350
The Issue Whether the Respondents' Florida real estate licenses should be disciplined based upon the following charges, as alleged in the administrative complaint: COUNTS I and II: Whether Respondent Richard Michael Regazzi ("Regazzi") is guilty of fraud, misrepresentation, concealment, false promises, false pretenses, dishonest dealing by trick, scheme or device, culpable negligence, or breach of trust in any business transaction in violation of Section 475.25(1)(b), Florida Statutes. COUNT III: Whether Respondent Regazzi is guilty of failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes. COUNT IV: Whether Respondent Atlantic Rentals Realty, Inc. is guilty of failure to maintain trust funds in the real estate brokerage escrow bank account or some other proper depository until disbursement thereof was properly authorized in violation of Section 475.25(1)(k), Florida Statutes. COUNT V: Whether Respondent Regazzi is guilty of failure to prepare the required written monthly escrow statement- reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and therefore in violation of Section 475.25(1)(e), Florida Statutes. COUNT VI: Whether Respondent Atlantic Rentals, Inc. is guilty of failure to prepare the required written monthly escrow statement-reconciliations in violation of Rule 61J2-14.012(2) and (3), Florida Administrative Code, and therefore in violation of Section 475.25(1)(e), Florida Statutes. COUNT VII: Whether Respondent Regazzi is guilty of having been found guilty for a third time of misconduct that warrants his suspension or has been found guilty of a course of conduct or practices which shows that he is so incompetent, negligent, dishonest, or untruthful that the money, property, transactions, and rights of investors, or those with whom he may sustain a confidential relation, may not safely be entrusted to him in violation of Section 475.25(1)(o), Florida Statutes.
Findings Of Fact Petitioner is a state government licensing and regulatory agency charged with the responsibility and duty to prosecute Administrative Complaint pursuant to the laws of the State of Florida, in particular Section 20.165, Florida Statutes, and Chapters 120, 455 and 475, Florida Statutes, and the rules promulgated pursuant thereto. Respondent Regazzi is, and was at all times material hereto, a licensed Florida real estate broker. License number 0273453 was issued in accordance with Chapter 475, Florida Statutes. The last license issued was as a broker in care of Atlantic Rentals, Inc., 6811 North Atlantic Avenue, No. B, Cape Canaveral, Florida. Respondent Atlantic Rentals, Inc. is, and was at all times material hereto, a corporation registered as a Florida real estate broker having been issued license number 0273444 in accordance with Chapter 475, Florida Statutes. The last license issued was at the address of 6811 North Atlantic Avenue, No. B, Cape Canaveral, Florida. At all times material hereto, Respondent Regazzi was licensed and operating as the qualifying broker and officer of Respondent Atlantic Rentals, Inc. On January 28, 1997, Petitioner's Investigator Maria Ventura ("Investigator Ventura") conducted an audit of Respondents' escrow account #3601612291, maintained at NationsBank and titled Atlantic Rentals, Inc., Multi Unit escrow Account (escrow account). On January 28, 1997, Respondents had a reconciled bank balance of $46,166.93. As of January 28, 1997, Investigator Ventura determined that Respondents had a total trust liability of $84,586.77. By comparing Respondents' reconciled bank balance with Respondents' trust liability, it was determined that Respondents had a shortage of $38,419.84 in their escrow account. In addition, Respondents were not performing monthly reconciliations of their escrow account. On January 28, 1997, Respondent Regazzi prepared a monthly reconciliation statement (reconciliation statement) for December 1996, and provided it to Petitioner on the same day. Respondent Regazzi's reconciliation statement indicated that there was shortage of $28,885.36 in the escrow account. Respondent Regazzi's reconciliation statement is not signed, and does not indicate what month was being reconciled. The statement indicates that the reconciled bank balance and trust liability agree when, in fact, the reconciliation statement indicates a shortage of $28,885.36. Respondent Regazzi's explanation of how the funds were removed from the escrow account by a third party is not credible. Even if this account were credible, it does not lessen Respondent Regazzi's culpability. On April 21, 1992, the Florida Real Estate Commission ("FREC") issued a final order whereby Respondent Regazzi was found guilty of misconduct and was fined $200, and placed on probation for one year with a requirement to complete and provide satisfactory evidence to the Department of having completed an approved 30-hour broker management course. Respondent successfully completed the terms of probation. On November 12, 1996, the FREC issued a final order whereby Respondent Regazzi was fined $250 for misconduct and Respondent Atlantic Rentals, Inc. was reprimanded.
Recommendation Upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Respondent Regazzi be found guilty of violating Sections 475.25(1)(b), (e), (k), and (o), Florida Statutes (1995), as charged in the Administrative Complaint. Respondent Atlantic Rentals, Inc. be found guilty of having violated Sections 475.25(1)(b), (k), and (e), Florida Statutes, as charged in the Administrative Complaint. That Respondents Regazzi's real estate license be revoked and that he be ordered to pay restitution in the amount of $38,419.84, plus interest. That Respondent Atlantic Rentals, Inc.'s corporate brokerage registration be revoked. RECOMMENDED this 23rd day of December, 1997, at Tallahassee, Leon County, Florida. DANIEL M. KILBRIDE Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 23rd day of December, 1997. COPIES FURNISHED: Daniel Villazon, Esquire Department of Business and Professional Regulation 400 West Robinson Street, Suite N-308 Orlando, Florida 32801 Richard Michael Regazzi, pro se Atlantic Rentals, Inc. 6811-B North Atlantic Avenue Cape Canaveral, Florida 32920 Henry M. Solares, Division Director Department of Business and Professional Regulation Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame General Counsel Department of Business and Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Respondent, Ann K. Croasdell, was a registered real estate broker at all times material hereto. She has been issued License #0141344. On June 28, 1978, William Young, the owner of apartment #47, 848 Park Lake Circle, Maitland, Florida, conveyed said apartment to Susan B. Bickley. A warranty deed as to this transaction was recorded on June 30, 1978. On April 24, 1979, Bickley conveyed apartment #47, 848 Park Lake Circle, Maitland, Florida, to Respondent. This deed was recorded on April 25, 1979. Thereafter, on April 26, 1979, Respondent conveyed apartment #47, 848 Park Lake Circle, Maitland, Florida, to William Young. The warranty deed was signed by Respondent in Young's presence and Respondent delivered the warranty deed to Young by physically handing it to him after the document had been notarized. The warranty deed from Respondent to Young was not recorded until September 3, 1980. Over a year after she conveyed to Young, Respondent went to Levie Florida Investments, licensed mortgage brokers, and made application for a second mortgage loan on the subject property. Respondent dealt with James Levie, a mortgage banker with Levie Florida Investments. Levie was present when the application was made and saw the Respondent sign the document. His signature also appears on Respondent's mortgage loan application dated August 11, 1980. On August 20, 1980, the closing for the second mortgage on apartment #47, 848 Park Lake Circle, Maitland, Florida, was held. On that date, Respondent executed a mortgage deed and mortgage note from herself to Levie Florida Investments, a certificate of confirmation specifically stating that Respondent was the owner, a notice to first mortgage holder, and a loan closing statement. At that closing, Levie Florida Investments disbursed, to Respondent, its check #5937, in the amount of $6,000.00. The check was signed by James Levie and was delivered to Respondent at the time of closing. Subsequently, the check was negotiated by Respondent and returned to Levie Mortgage marked paid. Respondent never advised Levie Mortgage Company or any of it agents, including James Levie, up to and including the date of closing, that she had executed a deed to the property to any other party. She never indicated to anyone at Levie Mortgage Company or any of its agents that anyone else had any other interest in the property; nor did she ever indicate that she was acting as a trustee, agent or in any other fiduciary capacity on behalf of another person in seeking this loan. Further, Levie was never made aware by anyone, while the transaction was pending, that, in fact, a deed had been executed to another individual. It was not until after the loan had been closed and the mortgage had been placed in default that James Levie ultimately found out that a deed had been executed by William Young. This was discovered when he requested a title search be made by Giles, Hedrick & Robinson prior to the institution of foreclosure action. The evidence was inconclusive as to the reason Respondent failed to inform Levie Mortgage Company as to the ownership status of the property on which she sought and obtained the second mortgage loan. Respondent claims she was serving in a trust relationship with William T. Young at the time. Young denies this relationship existed or that he had knowledge of the second mortgage transaction.
Recommendation In consideration of the foregoing, it is RECOMMENDED: That Petitioner enter a Final Order suspending Respondent's real estate broker's license for a period of three years. 2/ DONE and ORDERED this 21st day of March, 1983, in Tallahassee, Florida. R.T. CARPENTER Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 21st day of March, 1983
The Issue Whether Respondent committed the violations alleged in the Administrative Complaint? If so, what disciplinary action should be taken against her?
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made: The Department is a state government licensing and regulatory agency. Respondent is now, and has been at all times material to the instant case, a licensed real estate broker in the State of Florida holding license number 0005609. She is 72 years of age. The money she earns as a real estate broker helps to supplement her retirement income. In the almost 40 years that she has been broker, the only complaint that has been made against her in connection with the practice of her profession is the complaint that is the subject of the instant case. Peter Rettig is a longtime acquaintance of Respondent's. He too is a Florida real estate broker. Rettig is the operating and qualifying broker for La Costa Real Estate, Inc. In September of 1993, as a favor to Rettig, Respondent agreed to act, without compensation, as Rettig's escrow agent. Thereafter, Rettig deposited trust funds received from his buyer/clients in the "Mary A. Belotto Escrow Account" (account number 3431110272) that Respondent had established at Barnett Bank. On various occasions from September of 1993, to July of 1994, Respondent, unthinkingly, appropriated a portion of these funds for her own personal use, but acted swiftly to replace the appropriated funds with her own personal funds. As a result, no one was actually harmed by her actions. During this period of time, Respondent was suffering from severe emotional distress and a resulting inability to think clearly due to the death of her husband and the subsequent death of a close friend who had provided her with needed assistance and support following her husband's death. On January 18, 1995, Edward Gruskin, an investigator with the Department, conducted an office inspection/audit of La Costa Real Estate, Inc. and the "Mary A. Belotto Escrow Account." The inspection/audit revealed that Respondent had engaged in the conduct previously described in Finding of Fact 11 of this Recommended Order and that, in addition, she had failed to prepare and sign monthly reconciliation statements for her escrow account. Respondent now realizes that she erred in engaging in such conduct and in failing to prepare and sign these reports. She has apologized for making these errors and has promised, with apparent sincerity, not to repeat them in the future.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law it is hereby RECOMMENDED that the Commission enter a final order finding Respondent guilty of the violations alleged in the Administrative Complaint and fining her $250.00, issuing her a reprimand, and placing her on probation for a period of three years for having committed these violations. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 14th day of September, 1995. STUART M. LERNER Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of September, 1995. APPENDIX TO RECOMMENDED ORDER The following are the Hearing Officer's specific rulings on the findings of fact proposed by the parties in their proposed recommended orders: The Department's Proposed Findings 1-2. Accepted and incorporated in substance, although not necessarily repeated verbatim, in this Recommended Order. 3. Not incorporated in this Recommended Order because it would add only unnecessary detail to the factual findings made by the Hearing Officer. 4-5. Accepted and incorporated in substance, except for 5c. and 5d., which have not been incorporated in this Recommended Order because they would add only unnecessary detail to the factual findings made by the Hearing Officer. Respondent's Proposed Findings First unnumbered paragraph: To the extent that this proposed finding states that Respondent is 72 years of age and has been a real estate broker in the State of Florida for almost 40 years, it has been accepted and incorporated in substance. Second unnumbered paragraph: Accepted and incorporated in substance. Third unnumbered paragraph: Not incorporated in this Recommended Order because it would add only unnecessary detail to the factual findings made by the Hearing Officer. Fourth and fifth unnumbered paragraphs: Accepted and incorporated in substance. Sixth unnumbered paragraph: Rejected as a finding of fact because it is more in the nature of argument than a finding of fact. Seventh unnumbered paragraph- First sentence: Accepted and incorporated in substance; Second sentence: Rejected as a finding of fact because it is more in the nature of argument than a finding of fact. COPIES FURNISHED: Daniel Villazon, Esquire Senior Attorney Department of Business and Professional Regulation 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802 Mary A. Belotto 1571 Southeast 23rd Avenue Pompano Beach, Florida 33062 Henry M. Solares, Division Director Division of Real Estate 400 West Robinson Street Post Office Box 1900 Orlando, Florida 32802-1900 Lynda L. Goodgame, Esquire General Counsel Department of Professional Regulation 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact On November 15, 1976, the Outrigger Club, Inc., a Florida corporation, through its president, Ervin Freeman, and its Secretary, Joan Dimon, executed a warranty deed conveying all right, title and interest, in and to certain property located at Northeast 135th Street and Biscayne Boulevard, North Miami, Florida, to Petitioner, Biscayne South, Inc. (hereafter Biscayne South), a Florida corporation. The warranty deed was recorded with the Clerk of the Circuit Court of Dade County, Florida, on November 16, 1976. On November 22, 1976, Biscayne South executed a mortgage deed in favor of Fidelity Mortgage Investors, a Massachusetts business trust, as a second mortgage on the same parcel of land to secure the payment of a promissory note in the principal sum of $1,500,000.00 which note was made by Outrigger Club, Inc., on the same date in favor of Fidelity Mortgage Investors. On November 22, 1976, Outrigger Club, Inc., as the "borrower" executed a future advance agreement with Fidelity Mortgage Investors as "lendor". The future advance agreement provides for the advancement of the sum of $1,500,000.00 to be secured by a prior mortgage dated October 27, 1972, executed by Outrigger Club, Inc., in favor of Fidelity Mortgage Investors, which mortgage provided for future advances. On November 22, 1976, a construction loan and disbursement agreement was executed by the parties thereto which provided that the $1,500,000.00 advance be paid to Miami National Bank as disbursement agent for the benefit of Biscayne South. On November 23, 1976, the mortgage deed and the future advance agreement were recorded in the public records of Dade County, Florida, and on that same date, the warranty deed was rerecorded in the public records of Dade County, Florida. Because the 1.5 million dollars was paid to Miami National Bank to be disbursed for future construction work on a draw-down basis, Outrigger Club, Inc., the grantor, never received the 1.5 million dollars. The warranty deed provides in paragraph 9 thereof that the conveyance is subject to: a second mortgage wherein the Outrigger Club Inc., is mortgagor and the trustees of Fidelity Mortgage Investors, a Massachusetts business trust, is mortgagee, dated the day of November, 1976, which said mortgage is given as additional collateral for payment of certain sums as provided under a settlement and release agreement between the Outrigger Club, Inc., a Florida corporation, and Lawrence F. Lee, Jr., and others as trustees of Fidelity Mortgage Investors, a Massachusetts business trust dated the 16th day of January, 1976. Neither the Department of Revenue nor Biscayne South have introduced evidence to establish that such a mortgage in fact exists or if it did, the value of such mortgage. The only mortgage in evidence is Respondent, Department of Revenue's Exhibit 2, which shows Biscayne South as mortgagor rather than the Outrigger Club, Inc., as recited in the warranty deed. However, the future advance agreement introduced as Respondent's Exhibit No. 3, establishes the existence of a mortgage encumbering the subject property in which the Outrigger Club, Inc., is mortgagor and Fidelity Mortgage Investors is mortgagee. Such mortgage is dated October 27, 1972, and not dated with the month of November, 1976, as recited in paragraph 9 of the warranty deed. As recited in the future advance agreement, the mortgage of October 27, 1972, secured an indebtedness of $7,214,000.00. The mortgage provided that future advances could be made to Outrigger Club, Inc., not to exceed in the aggregate $16,500,000.00. The future advance agreement provides that an additional advance of $1,500,000.00 is to be made to Outrigger Club, Inc., thereby increasing the indebtedness represented by the October 27, 1972, mortgage to the aggregate sum of $8,715,000.00. In other words, the buyer of the property sought to borrow an additional 1.5 million dollars. The lender, in order to achieve priority of lien to secure its loan, treated the funding as an advance against a preexisting mortgage originally binding the seller, but then delivered the 1.5 million dollars directly to Miami National Bank for the benefit of the buyer. Accordingly, the seller never received the proceeds of the loan but rather participated in a "book transaction" for the benefit of the buyer and the lender.
Findings Of Fact Albert Earl Wise, II, (Al,II) (Case No. 86-2161) began work as a securities salesman in Memphis, Tennessee, approximately November 15, 1982. He was a plumber when an old friend recruited him to be come a salesman with G.I.C. Government Securities, Inc., which was registered with the Department of Banking and Finance, Division of Securities (Department), from June 8, 1982, until October 1, 1985. In February, 1983, Al,II, was transferred to Tampa to work in the branch office being opened there by an office manager named Lonnie Kilpatrick. Kilpatrick had been a government trader with the firm in Memphis. In approximately July, 1984, Al,II, became the Tampa branch manager. As the firm's Florida business expanded, Kilpatrick took over sole ownership and named Al,II, general manager over all the offices in Florida. Al,II, also became vice-president, comptroller and member of the board of directors of G.I.C. Government Securities, Inc. As general manager, Al,II, was responsible for the day-to-day operations of the company. A more accurate description of his duties is that of sales manager as he was primarily responsible for promoting sales and motivating the account executives/sales persons. Al,II's, duties did not include registration of securities, as he possessed no training in that area, nor deciding what products G.I.C.. Government Securities would sell. Notwithstanding having been named comptroller and vice- president, Al,II, was not allowed by Kilpatrick, despite request, to audit or examine the company's books and records. Lonnie Kilpatrick decided what securities the entity would offer, as well as who, if anyone, would have access to the corporate records. Dorothy (also known as D'Oresa) Wise Young (Case No. 86-1848) was employed by G.I.C. Government Securities, Inc., as an associated person from September, 1983, through April, 1985, and as Sarasota branch manager from January through April, 1985. She is Al,II,'s daughter. Albert Earl Wise, III, (Al,III) (Case No. 86-1888) was employed by G.I.C. Government Securities, Inc., as an account executive from February, 1983, through April, 1985, became Boca Raton and Orlando branch manager, and was a member of the board of directors of G.I.C. Government Securities, Inc. Al,III, is Al,II,'s son. Glenn Patrick Young (Case No. 86-1847) was employed by G.I.C. Government Securities, Inc., as an associated person from January through April, 1985. He is Dorothy's husband. David Randall Phillips (Case No. 86-1887) was employed by G.I.C. Government Securities, Inc., as an associated person or agent from August, 1984, to May, 1985. He is a long-time, close friend of Al,III. William Fredrick Mann (Case No. 86-2160) was employed by G.I.C. Government Securities, Inc., as an associated person or agent from February to April, 1985. He is Al,III,'s father-in-law. Al,II, was employed as a general manager of G.I.C. Securities Corporation from at least January 27, 1985 to March 5, 1985 and supervised the sale of securities by unregistered agents of G.I.C. Securities Corporation to following investors located outside the State of Florida: Fred E Martin or Matalie L. Martin $85,000 Post Office Box 449 West Upton, Massachusetts 01587 Gregory E Westerman $50,000 2034 Strathmoor Boulevard Louisville, Kentucky 40205 Karen E Prevett $70,000 72 Old Farm Road Mansfield, Massachusetts 02048 Harvey Notis or Marion Notis $50,000 R. D. 3 Box 1248 Great Harrington, Massachusetts 01230 C. T. George $155,000 Living Revocable Trust Trust Dated 01/31/83 20 Palmer Drive Canton, Massachusetts 02021 Geoffrey P. Pollitt $25,000 313 Simon Willard Road Concord, Massachusetts 01742 Walter Kossman or Virginia Kossman $25,000 1594 S. Circle View Seven Hills, Ohio 44131 Robert Anandale Trustee $30,000 Dated 02/28/84 F.B.O. Robert Allandale c/o Central National Bank 6690 McKenzie Road North Olmstead, Ohio 44070 William P. Giblin $25,000 6433 Beverly Drive Parma Heights, Ohio 44129 Walter Kossman or Virginia Kossman $25,000 1594 South Circle View Seven Hills, Ohio 44131 Dorothy L. Bayman or Dale L. Bayman $85,000 150 Belleair Avenue Dayton, Ohio 45420 Dorothy Wise Young was employed by G.I.C. Securities Corporation as an account executive although not registered with Respondent in any capacity at anytime concerning said employment. Young also sold securities on behalf of G.I.C. Securities Corporation to the following investors despite not being properly registered with Respondent: Albin W. Johnson Box 333 Randolph, Massachusetts 02368 $75,000 T. W. Wenzlick or Viola 421 Jeffrey Drive R. Wenzlick $25,000 New Washington, Ohio 44854 Harvey Notis or Marion Notis $50,000 R. D. 3, Box 142C Great Barrington, Massachusetts 01230 Al,III, was employed by G.I.C. Securities Corporation as an account executive from January to April, 1985, and admitted engaging in the sale of one or more securities while employed by said firm. Al,III, also admitted to not being properly registered in the State of Florida with G.I.C. Securities Corporation. G.I.C. Securities Corporation was denied a license by Order of the Department dated April 16, 1984, in part for material false statements in the application and demonstration of the applicant's unworthiness to transact the business of a broker/dealer. G.I.C. Securities Corporation subsequently filed a petition for formal hearing regarding the Department's denial of registration. On August 30, 1984, G.I.C. Securities Corporation entered into a stipulation, consent agreement and final order with the Department. This written agreement provided that the firm would not apply to the Department for registration under Section 517.12(1), Florida Statutes, for a period of twelve months from August 30, 1984, and that it would fully and faithfully comply with all of the provisions of Chapter 517, Florida Statutes, and the rules of the Department. On the basis of these findings of fact, on April 9, 1985, the Department ordered the firm to cease and desist from violating Chapter 517, Florida Statutes, and more specifically from selling unregistered securities and from selling securities without being lawfully registered to do so. Al,II, also sold unregistered Government National mortgage Association GNMA/U.S. Treasury Trust Note securities, to the following individuals in the following amounts: Joseph or Bernice Metcalf 4299-14th Street N.E. St. Petersburg, Fl 33703 $25,000 Bruce or Diane J. Fenton 2435 Post Road Sarasota, Fl 33581 $5,000 Betsy O. Lester 1200 Capri Circle S. Apt. 29 Treasure Island, Fl 33706 $10,000 Ernest L. Miller Post Office Box 458 Lake Hamilton, Fl 33851 $7,000 John and Louise Magill 4260 S.E. 20th Place Apt. Cape Coral, Fl 33904 208 $10,000 Mrs. Lina Anker-Simmons Post Office Box 353 Boca Grande, Fl 33921 $10,000 Charles W. Wood or Babetta 211 W. Emily Tampa, Fl 33603 Edmunds $10,000 Margaret McMenamy 1225 N.W. 16th Street Pembroke Pine, Fl 33026 $20,000 Suzanne J. Lewis 4703 Brookwood Drive Tampa, Fl 33629 $10,000 Raymond or Suzanne Lewis 4703 Brookwood Drive Tampa, Fl 33629 $10,000 Deno or Barbara Kazanis 2310 Southern Lights Lutz, Fl 33549 $5,000 William K. Mall, IV 9500 82nd Avenue N. Seminole, Fl 33543 $20,000 Carl E. or Minnie E. Gustafson $10,000 Post Office Box 451 Matlacha, Fl 33909 John A. or Louis Gress $22,000 Post Office Box 1555 Palm Harbor, Fl 33563 Marguerite Gould or Marguerite Robertson $10,000 16183 Dublin Circle Casa Bella Bldg. A-Apt. 103 Ft. Myers, Fl 33908 Robert J. Evans $7,000 Rt. 2, Box 12-B Moore Haven, Fl 33471 Virginia H. or Robert E Bartlett $10,000 4703 Baycrest Drive Tampa, Fl 33615 Robert S. or Helen M. Gerard $5,000 or Frances C. Rafter JT WROS, 4521 W. Rogers Avenue Tampa, Fl 33611 Jacinto R. or Palmira M. Fernandez $10,000 8436 Nebraska Avenue Tampa, Fl 33604 Paul E. or Elizabeth A. Cleveland $10,000 306 Kllburn Road Holiday, Fl 33590 William F. Price $30,000 custodian for Gary Cotton Dan Cook 9105 Tudor Dr #F102 Tampa, Fl 33615 Ruth T. Penner or Laura B. Wood $5,000 1204 W. Risk-Apt. G Plant City, Fl 33566 Edward G. or Eleanor G. Daniels $20,000 4630 B.E. 20th Place Cape Coral, Fl 33904 Frederick S. Crysler $5,000 1200 Johnston Road Unite B-24 Dade City, Fl 33525 Hazel H. Aspinwall or Frederick F. Smith $30,000 69 Arrowhead Drive St. Augustine, Fl 32086 Jay E or Betty A. Yager $20,000 or Martha Dean Post Office Box 465 Astatula, Fl 32705 Katherine B. Wolf $10,000 1850 Palmcrest Lane Clearwater, Fl 33546 Howard J. or Margaret M. Williams $10,000 8290 Oakhurst Road Seminole, Fl 33542 Roy or Dorothy Schreiner $15,000 4112 Robin Way Valrico, Fl 33594 Alfred or Frances Richter $13,000 7248 Antigua Place Sarasota, Fl 33581 Kaye Reid Wainwright $50,000 10671 William Tell Drive Orlando, Fl 32821 Charles A. Kottmeier $25,000 1200 Druid Road S. #7 Clearwater, Fl 33516 Bernie or Sylvia Albert or $10,000 Sharon Terry Albert 10642 Watertown Court Orlando, Fl 32809 Arnold or Gloria Barr $10,000 7503 Willow Court Tampa, Fl 33614 Edward Daniels Development Company $35,000 4630 S.E. 20th Place Cape Coral, Fl 33904 John W. DuBrian $30,900 2912 Tiburon Drive New Port Richey, Fl 33553 Arthur and Ruth P. Hiller $10,000 10702 Westbrook Dr Orlando, Fl 32821 Charles A. Kottmeir $40,000 200 Druid Road S. #7 Clearwater, Fl 33516 Kenneth S. Preston $12,000 11839 U.S. Hwy 41 S. Gibsonton, William E. Fl 33534 Morris $11,000 271-B Deming Avenue North Port, Fl 33596 Walter Leena M. Fennander $7,000 1727 Bayshore Boulevard Dunedin, Fl 33528 Thomas B. or Charlene M. Austin $10,000 309 15th Avenue Indian Rocks Beach, Fl 33535 Katherine Wolf $10,000 1850 Palmcrest Lane Clearwater, Fl 33546 Dorothy Wise Young sold unregistered Government National Mortgage Association GNMA/U.S. Treasury Trust Note securities, to the following individuals in the following amounts: George W. Arnold $8,000 618 4th Avenue S. St. Petersburg, Fl 33701 W. R. Bauman or Barbara Nagle $10,000 Post Office Box 16 Yankeetown, Fl 32698 George W. or Marjorie E. Border $10,000 860 N. Lake Avenue Avon Park, Fl 33825 Joan or Jerome Brenan 0005 Granite Lane Orlando, Fl 32821 $10,000 Freida Blockner 14623 Bonaire #607 Delray Beach, Fl 33446 $5,000 John or Elizabeth Grabowski 2308 Castilla Isle Fort Lauderdale, Fl 33301 $10,000 Louis or Mary Hoffman 3512 Spring Valley Drive New Port Richey, Fl 33552 $10,000 Raymond F. Joyce custodian for Salvatore Leone 267 S. Ocean Boulevard #212 C Pompano Beach, Fl 33062 $5,000 John or Caroline Susanec $10,000 215 Stafford Avenue Brooksville, Fl 33512 Stephen Karakay $10,000 Box 3344 Sarasota, Fl 33578 Mrs. Floyd A. Flowers or James A. Monroe $5,000 Route 2, Box 330H Crestview, Fl 32536 Fannie Felicia Caliuzzi $5,000 2742 C. Sherbrook Lane Palm Harbor, Fl 33563 Emma Carolyn Hammond $95,000 130 Devon Drive Clearwater, Fl 33515 A. E. or Joyce LaBeau $12,000 1801 Marine Park Way #106 New Port Richey, Fl 33552 A. E. or Joyce LaBeau $13,000 1801 Marine Park Way #106 New Port Richey, Fl 33552 A. E. or Joyce LaBeau $7,000 1801 Marine Park Way #106 New Port Richey, Fl 33552 Oscar Ritter $5,000 952 N.E. 199th Street #415 N. Miami Beach, Fl 33179 Murial or Sherry Stearns 580 Rio Vista Avenue $9,000 Daytona Beach, Fl 32014 F. William or Frances C. Van 219 87th Street Stone Harbor, N.J. 08247 Ness $6,000 Kaye Reid Wainwright 10671 William Tell Drive Orlando, Fl 32821 $50,000 Adele Althouse 400 Freedom Square U.S.A. Apt. J 619 Seminole, Fl 33542 $5,000 Murial or Sherry Stearns 580 Rio Vista Avenue Daytona Beach, Fl 32014 $10,000 F. William or Frances C. Van 112 S.W. 1st Avenue Seller Apt. Ness $10,000 Delray Beach, Fl 33444 McKinely or Grace Anderson 12408 Oakleaf Avenue Tampa, Fl 33612 $10,000 Mrs. Eileen Coutts 190 S.W. 72nd Terrace Margate, Fl 33068 $18,000 John C. Bertram 1416 Lake Marion Drive Apopka, Fl 32703 $8,000 Luther or Alena D. Ellis Rt. 2, Box 72 Wauchula, Fl 33873 $20,000 F. H. or H. Elizabeth Groezinger $15,000 2308 Crescent Ridge Road Daytona Beach, Fl 32018 Luther or Alena D. Ellis $30,000 Rt. 2, Box 72 Wauchula, Fl 33873 Mrs Isabelia K. Berg $6,000 5421 B Lakefront Blvd. Delray Beach, Fl 33445 Al,III, sold unregistered Government National Mortgage Association GNMA/U.S. Treasury Trust Note securities, to the following individuals in the following amounts: Charles S. Ammerman or Florence F. Ammerman $6,500 710 Lake Hiawassee Orlando, Fl 32811 Eva Wilson $15,000 409 S.E. 2nd Court Deerfield Beach, Fl 33441 Frank or Jean Arnold $18,000 6020 Shakerwood Circle, #G-108 Tamara, Fl 33319 Virginia Cummins or J. H. Cromer $15,000 311 S. Dean Street Westport, Indiana 47283 Morris or Sylvia Erlbaum $10,000 6795 Huntington Lane Bld. #14, Apt. #207 Delray Beach, Fl 33446 Lois G. Crosley $41,000 1626 Silversmith Place Orlando, Fl 32818 Sandy Garrison or Mary M. Boitnott $15,000 3104 Harrison Ave., #C-18 Orlando, Fl 32804 William or Rose Herzog $25,000 Custodian for Ronald Coyne 258-A Hibiscus Drive, M.F.L. Leesburg, Fl 32788 Helen Klein or Shari Weitzner $5,000 3205 Portofina #C-4 Coconut Greek, Fl 33066 Mattye Oliver or Eileen Johnson $3,000 147 W. State Street Kennett Square, PA 19348 Alma Pagliaro or Nancy De Marco $10,000 or Godfrey D. De Marco 9925-B Papaya Tree Trail Boynton Beach, Fl 33436 Gai S. Verner I.T.F. Bill Trilsch $25,000 901 N.W. 31st Avenue Box 13 Pompano Beach, Fl 33069 Harry or Anita Cope $5,000 417 Piedmont I Delray Beach, Fl 33445 Al Rappaport or Ellen Rappaport $15,000 2780 Pine Allen Rd. N. Sunrise, Fl 33329 Godfrey D. De Maro or Nancy De Marco $5,000 9925-B Papaya Tree Trail Boynton Beach, Fl 33436 Morris Erlbaum or Sylvia Erlbaum $10,000 6795 Huntington Lane Delray Beach, Fl 33446 A. Froid or Gertrude Froid $10,000 in trust for Roy Lee Froid 2600 S.W. 18th Terrace Ft. Lauderdale, Fl 33315 Max Pendergrast or Carol Pendergrast $20,000 custodian for Eric & Kurt Pendergrast 1611 S.W. 26th Street Ft. Lauderdale, Fl 33315 Glenn Patrick Young sold unregistered Government National Mortgage Association GNMA/U.S. Treasury Trust Note and GNMA/Mortgage Backed Collateral Note securities, to the following individuals in the following amounts: Wanda G. Baugh $10,500 Trustee for Buford Sitzlar Post Office Box 1523 Bonita Springs, Fl 33923 Wanda Baugh $5,000 Trustee for Buford Sitzlar Post Office Box 1523 Bonita Springs, Fl 33923 Norman R. or Margaret 3442 Gerhardt Street A. Keyes $25,000 Sarasota, Fl 33577 Norman R. or Margaret 3442 Gerhardt Street Sarasota, Fl 33577 A. Keyes $25,000 Howard W. or Hazel M. 3300 26th Avenue East Apt. 17-A Bradenton, Fl 33508 Kerr $10,000 David Randall Phillips sold unregistered Government National Mortgage Association GNMA/U.S. Treasury Trust Note securities, to the following individuals in the following amounts: Frank G. and Mildred W. Reynolds $2,500 JTWROS 400 S. Orlando #305 Maitland, Fl 32751 Vivian W. McCann or Marilyn Culpepper $10,000 JTWROS 2211 Beatrice Drive Orlando, Fl 32810 Stanislaw Szamrej or Stanislawa Szamrej $10,000 or Zdzislaw Szamrej JTWROS 2204 Stanley Street Orlando, Fl 32803 Paul Gheorghiu or Martha Gheorghiu $2,500 JTWROS 6565 Carder Drive Orlando, Fl 32818 Marjorie R. Romano or Michael Romano $40,000 11508 Benbow Court Orlando, Fl 32821 William Fredrick Mann sold unregistered Government National Mortgage Association GNMA/U.S. Treasury Trust Note securities to Mark Fulkerson or Bea Kuykendall, 7900 Montezuma Trail, Orlando, Fl, in the amount of $41,000. On April 9, 1985, the Department issued an Administrative Charges and Complaint against G.I.C. Government Securities, Inc., alleging among other things the sale of unregistered securities. On June 27, 1985, the Department entered into a Stipulation and Consent Order whereby G.I.C., its officers and directors and other persons acting in cooperation or concert with them or at their direction were permanently enjoined in part from selling unregistered securities and from obtaining money or property by means of untrue or misleading statements. Despite their positions with Kilpatrick's firms, the petitioners were not told, and did not know, that G.I.C. Securities Corporation was not registered with the Department. Al,III, and Dorothy Wise Young were registered in the states of Ohio (Al,III, only), Delaware and Massachusetts, and Kilpatrick, who had the benefit of legal counsel, had told them that it was legal for them to sell from their Florida offices to customers in those states. Likewise, Kilpatrick and the company's legal counsel, Tony Todd, told Al,II, Al,III, and Dorothy in late 1984 that the Government National Mortgage Association GNMA/U.S. Treasury Trust Notes and GNMA/Mortgage Backed Collateral Notes issued by Southern Bond Clearing were exempt from registration. Following Kilpatrick's instructions, they had their salesmen, including Glenn Patrick Young, Phillips and Mann, sell the securities. Despite their respective positions with G.I.C. Government Securities, Inc., and despite their representation on their U-4 Form applications to be associated persons with the firm that they were familiar with Florida's securities laws, none of the petitioners knew that those securities were unregistered securities for which there was no exemption. In March, 1985, Al,II, was in Memphis interviewing with the securities broker Turner & Sellhorn, Inc., about possible employment. At the time, although earning income well into six figures, Al,II, was dissatisfied with the way Kilpatrick was keeping him in the dark about some aspects of the companies' operations and finances. While in Memphis, Al,II, called in to his Tampa office and was told that the Department was engaged in some kind of audit. After he returned to the office, on April 4, 1985, he confronted Kilpatrick and demanded to know what the audit was about. Kilpatrick told him for the first time that violations had been committed by selling unregistered securities and selling for G.I.C. Securities Corporation, which had not been registered. Although Al,II, and Al,III, technically were members of the board of directors of G.I.C. Government Securities, Inc., there were no meetings of the board during their tenure, and Kilpatrick did not fully disclose the details of the firm's operations and finances to them. The Wises also were not made privy to the operations of related firms, such as Southern Bond Clearing. Dissatisfied with the position in which Kilpatrick had placed him and Al,III, Al,II, decided to resign despite Kilpatrick's offer of concessions and an expenses-paid trip to Europe as enticement to Al,II, stay on with the company. Al,II, resigned the next day, effective April 15, 1985. Al,III, resigned as a director on April 17, 1985. When Al,II, resigned, the other petitioners--family and friends whom Al,II, had brought to the company--began discussing plans to leave. On April 9, 1985, Gerald Lewis, as Comptroller, entered the cease and desist orders enjoining G.I.C. Securities Corporation from selling any securities while still unregistered and enjoining both G.I.C. Government Securities, Inc., and G.I.C. Securities Corporation from sales of unregistered securities. But the orders did not otherwise enjoin G.I.C. Government Securities, Inc., from conducting business. When Dorothy Wise Young inquired of a Department employee, the violations were characterized as "technical." The petitioners then decided that, to be able to have uninterrupted income, the others would stay at the company until Al,II, secured employment at Turner & Sellhorn and could hire the others on at Turner & Sellhorn. But on April 30, 1985, Kilpatrick required all employees to sign a new employment contract which provided, among other things, for 90 days notice before an employee could terminate employment. At that point, the petitioners still at the company (i.e., all but Al,II) refused to sign the new contract and resigned from employment. Up to the departure of the petitioners from Kilpatrick's companies, none of them had any reason to think that securities they sold would not be delivered in due course of time to the customers who purchased them. Securities always had been delivered properly during the term of their employment with the companies. The petitioners, like the Department's employees, were not privy to the companies' finances and had no reason to believe the companies would not, or would not be able to, deliver securities that had been purchased. It is not a customary practice in the industry for securities salesmen associated with a broker/dealer to remain responsible for insuring delivery of securities after termination of employment with the broker/dealer. To the contrary, it is customary for the salesman to rely on the broker/dealer to follow through on delivery of securities. On or about July 22, 1985, the petitioners' U-4 Form applications to be associated persons with Turner & Sellhorn, Inc., were granted, and they began employment at Turner & Sellhorn. They mailed notices to their former customers to advise the customers of their new place of employment. Later in the summer of 1985, some of the petitioners were told by former customers both that G.I.C. Government Securities, Inc., had begun selling short-term zero coupon repurchase agreements and that some former customers had not yet received possession of securities purchased from some of the petitioners on or before April 30, 1985, an extraordinary delay. After discussing these developments with Mr. Turner, the petitioners concluded that Kilpatrick's companies might be having financial difficulties and that the former customers might be at risk. The petitioners began to try to contact all of their former customers to caution them about the "zero repos" and to be sure they had received possession of their securities. This was not easy since many of the petitioners' former customers already had left for summer residences up north, some without leaving a forwarding address or telephone number. Glenn Patrick Young sent letters to the U.S. Postal Service and paid its service fee to obtain a good address or telephone number at which to contact six of his former customers If former customers the petitioners were able to contact had not yet received their securities, petitioners advised them to contact G.I.C. Government Securities, Inc., immediately and demand satisfaction--either possession of their securities or return of their investment. They further advised the customers that, if the company did not satisfy them within a week to ten days, they should contact the Department. Thanks to petitioners' efforts, several of their former customers recovered either their security or investment. For example, Al,III, was able to contact former customer Bryant on August 20, 1985, on Bryant's return to Florida and was told that Bryant still had not received the GNMA certificate he had bought on March 26, 1985. Following Al,III,'s advice, Bryant got his certificate on September 6, 1985. Glenn Patrick Young was contacted by former customer Bough about a "zero repo." He advised her not to invest and to contact the Department. Young also called former customers Neukom and Horowitz and, by his advice, helped Neukom get her $23,000 investment returned around September 25, 1985, and helped Horowitz get his $66,000 GNMA certificate on September 6, 1985, after a six month delay. David Randall Phillips helped former customers, including Mrs. Moffat, who called Phillips at his home for help in August, 1985, because she still had not received the security she had purchased in April, 1985. Phillips advised Moffat to write a letter to the Department, and she got her security within five days. Unfortunately, not all of petitioners' former customers had gotten satisfaction--either the security they had purchased or the return of their investment--by the time G.I.C. Government Securities, Inc., went bankrupt on or about October 1, 1985. Some, including Lillian Nelson and Raymond Dennis (customers of Phillips), did not listen to petitioners' advice and counsel. One couple, the Bakers of Ft. Myers, were contacted by Glenn Patrick Young but misinformed him that they had received possession of their security when in fact they had not. Others could not be contacted because petitioners were unable to get a good address or telephone number for them during the summer and early autumn, 1985. Dr. Stanley Pollock of 332 Fifth Avenue, Suite 213, McKeesport, Pennsylvania, purchased three GNMA certificates in the amount of $195,131 from Dorothy Wise Young near the end of her employment at G.I.C. Government Securities. Young tried to telephone Pollock but had a bad telephone connection. She tried to leave a message for Pollock to call her if he had not yet received his securities and, when Pollock did not call her, she assumed that he had received them. In fact, Pollock never got the message because of the bad connection. As a result, Dr. Pollock did not receive or obtain registered ownership of the securities which he had purchased. He currently has a claim pending in the United States Bankruptcy Court for the Middle District of Florida for the purchase price of the certificates. At the direction of Richard Johnson of Tampa, Richard J. Hansen, IRA Plans Administrator, Retirement Accounts, Inc., Post Office Box 3017, Winter Park, Florida, purchased two GNMA certificates from Al,III, on behalf of Johnson in the amount of $18,470.37. Mr. Johnson did not receive the certificates. He moved to Wisconsin June through October, 1985, and gave Al,III, no forwarding address or telephone number (although Al,III, could have made contact with Mr. Johnson through Mr. Hansen.) James and Katheryn Putnal of Route 1, Box 14, Myakka City, Florida, purchased an $85,000 GNMA certificate from Glenn Patrick Young on April 12, 1985. In addition, M. Reed and Edna M. Veazey of 2141 Third Street East, Bradenton, Florida purchased a $50,000 Federal Home Loan Mortgage Corporation (FHLMC) certificate from him on February 11, 1985. Both couples moved from Florida (the Putnals from May 8 through August, 1985, and the Veazeys until October, 1985), and neither gave Young a forwarding address or telephone number. Young unsuccessfully tried to locate them through the U.S. Postal Service and then gave up. Before they left to go up north, the Putnals did receive Young's announcement that he had left G.I.C. and was starting employment with Turner & Sellhorn. But when they returned they called G.I.C., not Young, to inquire about delivery of their certificate and were told it was coming, give it time. The Veazeys also contacted G.I.C., not Young, after Young switched to Turner & Sellhorn and, in fact, bought two more GNMA certificates from G.I.C. after Young had left (although they still had not received the security they had purchased from Young on or about February 19, 1985.) Both the Putnals and the Veazeys have had to make claims in the United States Bankruptcy Court for the Middle District of Florida for the purchase price of the certificates. While employed by G.I.C. Government Securities, William Fredrick Mann sold GNMA certificates to the following individuals in the following amounts: Louis M. Totka or Marguerite A. Totka 117 Pine Circle Drive $25,000 Lake Mary, Fl 32746 Mignon Weinstein or Philip Weinstein 2910 Plaza Terrace Drive Orlando, Fl 32803 $40,000 Philip Weinstein or Mignon Weinstein 2910 Plaza Terrace Drive Orlando, Fl 32803 $55,000 Although Mann was able to contact these former customers in late July or in August, 1985, and advise and counsel them how to get satisfaction (i.e., either possession of the securities they had purchased or return of their investments, for some reason the Totkas and the Weinsteins did not get satisfaction before the G.I.C. bankruptcy. Despite their association with Kilpatrick's G.I.C. companies, the petitioners have been able to maintain a good reputation for competence, honesty and trustworthiness in their business dealings. Testimony of this kind came from Mr. Turner and Mr. Sellhorn of Turner & Sellhorn, Inc., and several of petitioners' former customers--four customers of Al,II; one of Dorothy; four of Al,III; three of Glenn Patrick Young; and three of Phillips. More than being responsible for the violations in which they have participated, petitioners have been fellow victims of Kilpatrick's violations. The most serious of the violations--failure to account for and deliver securities-- occurred after the petitioners left G.I.C. and through no doing of their own.
Recommendation Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that a final order be entered in these cases granting the applications of all of the petitioners for registration as associated persons with Certified Capital Corporation. RECOMMENDED this 29th day of April, 1987 in Tallahassee, Florida. J. LAWRENCE JOHNSTON Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 29th day of April, 1987. APPENDIX TO RECOMMENDED ORDER, CASE NOS. 86-1847, 86-1848, 86-1887, 86-1888, 86-2160 and 86-2161 To comply with Section 120.59(2), Florida Statutes (1985), the following rulings are made on proposed findings of fact. Respondent's proposed findings of fact were organized and filed separately by petitioner. Petitioners' proposed findings of fact were not timely filed and do not require explicit rulings (although they have been considered, as reflected in the Findings Of Fact.) Respondent's Proposed Findings Of Fact As To Glenn Patrick Young (Case No. 86-1847). 1.-5. Accepted and incorporated, along with additional findings. Respondent's Proposed Findings Of Fact As To Dorothy Wise Young (Case No. 86-1848). 1.-8. Accepted and incorporated, along with additional findings. 9. Rejected as contrary to facts found that Dr. Pollock had no contact with Young; in part, subordinate; otherwise, accepted and incorporated, along with additional findings. Respondent's Proposed Findings Of Fact As To David Randall Phillips (Case No. 86-1887). 1.-5. Accepted and incorporated, along with additional findings. 6. Subordinate to facts found. Respondent's Proposed Findings Of Fact As To Albert Earl Wise, III (Case No. 86-1888). 1.-8. Accepted and incorporated, along with additional findings. Respondent's Proposed Findings Of Fact As To William Fredrick Mann (Case No. 86-2160). 1.-6. Accepted and incorporated, along with additional findings. Respondent's Proposed Findings Of Fact As To Albert Earl Wise (Case No. 86-2161). 1.-7. Accepted and incorporated, along with additional findings. COPIES FURNISHED: Michael J. Echevarria, Esquire ECHEVARRIA & BENCHIMOL, P.A. Suite 3016, First Florida Tower 111 East Madison Street Tampa, Fl 33602 Charles E. Scarlett, Esquire Assistant General Counsel Office of the Comptroller Suite 1302, The Capitol Tallahassee, Fl 32399-0305 Gerald Lewis Comptroller, State of Florida The Capitol Tallahassee, Fl 32399-0305 Charles Stutts General Counsel Plaza Level The Capitol Tallahassee, Fl 32399-0305 =================================================================
Findings Of Fact Respondent Martha M. Bustillo is a real estate broker licensed in the State of Florida, having been issued license number 0401092. At all times material hereto, she has been the qualifying broker for Respondent Virmar Investments, Inc. Respondent Virmar Investments, Inc., is a real estate brokerage corporation licensed in the State of Florida, having been issued license number 0237551. At no time material hereto has Respondent Olga Venedicto been licensed in the State of Florida as either a real estate broker or as a real estate salesperson. In July of 1992 Thomas F. Sevilla contacted Virmar Investments, looking for a house to buy. Olga Venedicto took his phone call and told him that she would help him. Sevilla went to Venedicto's "office" at Virmar Investment and began working with her. Venedicto gave Sevilla her business card which represented that she is the vice president of Virmar Investments, Inc., and carries the notation "registered real estate brokers." In addition to giving him her card which carried her name, Virmar's name, and the word "brokers" in the plural form rather than the singular form, Venedicto specifically told Sevilla that she was a broker. Venedicto and Bustillo took Sevilla to see a house which he decided to buy. He gave Venedicto his check for $2,000 as a deposit and instructed her and Bustillo to make an offer on that house. Venedicto told him she would put the money in Virmar's escrow account. Instead, the money was deposited in Virmar's operating account. Sevilla did not buy that house, and Venedicto and Bustillo took him to see a second house. Sevilla decided not to make an offer on that house and asked Venedicto to refund his money. It took a month before Sevilla received a check from Venedicto. Although the check was marked "deposit return," the check was not written from Virmar's account but rather was a check from a Mega Group Corp. for only $1,675. When Sevilla attempted to cash that check, it was dishonored three times, with the notation "N. S. F." Finally, the check was honored by the bank. Sevilla had expected to receive his entire $2,000 deposit. Neither Venedicto nor Bustillo had ever told him in advance that they would keep part of his money. Although Respondents' attorney during the final hearing implied that his clients may have kept part of Sevilla's money to pay for a survey and credit report, Sevilla had not agreed in advance to pay for a credit report, and no evidence was offered as to what house Sevilla might have purchased a survey on or for what reason. Further, neither Venedicto nor Bustillo gave him a copy of any survey or credit report nor was he ever shown one or advised that either would be obtained. When Sevilla inquired as to why he was reimbursed the lesser amount, only then did Venedicto tell him that Respondents were keeping part of his money for a credit report. Respondents Bustillo and Virmar authorized and assisted Venedicto in her performance of acts and services requiring licensure as a salesperson relative to the transaction with Sevilla. Rita and Carlos Benitez listed their house for sale with Pedro Realty. Gladys Diaz was the listing agent at Pedro Realty. Respondents Bustillo and Venedicto brought Carlos Martinez and his wife to look at the Benitez house. Gladys Diaz was present at the time. Respondents Bustillo and Venedicto subsequently came to Diaz' office and presented to Diaz and Carlos Benitez an offer on behalf of Mr. and Mrs. Martinez. Respondent Venedicto represented herself to be a realtor and Respondent Bustillo to be Venedicto's partner and broker. Respondent Venedicto discussed the contract and price with Diaz and Benitez while Respondent Bustillo observed Venedicto's presentation. The offer had previously been signed on behalf of Respondent Virmar by Respondent Venedicto who represented to Diaz that the signature on the offer was that of Respondent Venedicto. Mr. Benitez signed the document, and Diaz then took the offer to Mrs. Benitez to obtain her signature. Mrs. Benitez also signed the offer, thereby completing the contract. Thereafter, delays ensued because Mr. and Mrs. Martinez were not in a financial position to be able to purchase the home. Respondent Venedicto contacted Mrs. Benitez and attempted to re-negotiate the contract. During those negotiations which were not successful, Respondent Venedicto represented herself to Mrs. Benitez as being a licensed real estate agent. In response to Mrs. Benitez' inquiries, Respondent Venedicto gave Benitez her business card carrying the names of Venedicto and Virmar and the notation "registered real estate brokers." As to the portion of the transaction involving Mrs. Benitez, all of her contact with the three Respondents in this cause was with Respondent Venedicto. Venedicto gave Benitez advice regarding proceeding with the sale and handled the negotiations. Prior to September 24, 1992, Hector F. Sehweret, an investigator for the Department of Business and Professional Regulation, requested that Respondents Bustillo and Virmar produce certain records for inspection by him. He spoke with Respondent Bustillo on a number of occasions to no avail. He offered to give her time to gather the records if necessary, but she never did. On September 24, 1992, he served Respondent Bustillo with a subpoena for those records. She still failed to produce them. Thereafter, she would not return his phone calls, and when he came to the office of Virmar Investments, Respondent Bustillo would hide from him. Neither Respondent Bustillo nor Respondent Virmar have ever produced the records subpoenaed. Further, no explanation has been given for the failure of Respondents Bustillo and Virmar to produce their records. Although the attorney for Respondents implied during the final hearing that the records may have been destroyed by Hurricane Andrew, there is no evidence to support that implication; rather, the evidence is uncontroverted that the building housing the real estate office of Respondents Virmar and Bustillo was not damaged by Hurricane Andrew. Ileana Hernandez is a realtor and a mortgage broker licensed in the State of Florida. She met Respondents Bustillo and Venedicto during a real estate transaction. In November of 1991 Respondents Bustillo and Venedicto contacted Hernandez regarding obtaining money in exchange for a second mortgage on certain real property. At the time, Respondents did not tell Hernandez the identity of the owner of the property, but Hernandez was given the address of the property and was advised that the market value of the property was approximately $79,000. Hernandez was subsequently advised that Respondent Venedicto (a/k/a Olga Bichara) was the owner of the property. It was agreed that Respondent Venedicto would execute and record the promissory note and mortgage in the amount of $15,500. Hernandez, who knew that Respondent Bustillo was the president of Terra Title, gave her a personal check payable to Terra Title in the amount of $15,000 on November 26, 1991. Respondent Venedicto, who had promised Hernandez that the promissory note and second mortgage would be recorded, never recorded those documents. Further, Respondents never delivered the original copy of the promissory note and mortgage to Hernandez despite her repeated demands. Hernandez later discovered that Respondent Venedicto was not the sole owner of the property which she had attempted to mortgage but jointly owned the property with her son. Accordingly, Respondent Venedicto's signature would not be sufficient to perfect a mortgage on the property. Hernandez also discovered that the mortgage, represented by Bustillo and Venedicto to be a second mortgage, was not. There were already two mortgages on the property. Had Hernandez known the true ownership and the true encumbrances on the property, she would not have loaned Venedicto the $15,000 because that raised the total amount of mortgages on the property to be in excess of the value of the property. Three checks which were subsequently written by Respondent Bustillo from the operating accounts of Respondent Virmar and of Mega Group Corp. were dishonored by the bank with the notation "N. S. F." As a result of those checks, Hernandez obtained default final judgments against Respondent Virmar and against Mega Group Corp., which final judgments are still unsatisfied. Prior to that time, however, Respondents Venedicto and Bustillo approached Hernandez regarding their need to borrow $35,000 to be re-paid in 30 days in conjunction with some real estate development in which Respondents Venedicto and Bustillo were involved. Respondent Venedicto and Respondent Bustillo each individually represented that Hernandez would have her money back in 30 days. Respondent Bustillo told Hernandez that Respondent Venedicto was in business with Bustillo and was selling real estate in Mexico. Bustillo asked Hernandez to make the check payable to Bustillo's company Terra Title. Hernandez went to the offices of Respondent Virmar and handed her personal check made payable to Terra Title to Respondent Venedicto. When the 30 days had passed with no payments to Hernandez, she went to Virmar Investments and made Respondent Venedicto sign a promissory note for $35,000. By the time of the final hearing in this cause, Hernandez had recovered only $15,000 of the $35,000 loan made to Respondent Venedicto and had recovered only the principal amount of the money supposed to have been secured by a second mortgage on real property. Hernandez is still owed $20,000 in principal alone.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered revoking the license of Respondent Martha M. Bustillo, revoking the license of Respondent Virmar Investments, Inc., and requiring Respondent Olga Venedicto to pay an administrative penalty in the amount of $5,000 within 30 days from the entry of the Final Order. DONE and ENTERED this 31st day of January, 1994, at Tallahassee, Florida. LINDA M. RIGOT Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 31st day of January, 1994. APPENDIX TO RECOMMENDED ORDER DOAH CASE NO. 93-3328, 93-3329, and 93-3330 Petitioner's proposed findings of fact numbered 2-18, 20-29, and 31-33 have been adopted either verbatim or in substance in this Recommended Order. Petitioner's proposed finding of fact numbered 1 has been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Petitioner's proposed finding of fact numbered 19 has been rejected as not being supported by the weight of the evidence in this cause. Petitioner's proposed finding of fact numbered 30 has been rejected as being unnecessary to the issues involved herein. Respondents' proposed findings of fact numbered 1, 4, 5, 8, 9, 18, 25, 26, 28, 37, 42, 49-52, 55, 57, 62, 63, 69, 71, and 73 have been adopted either verbatim or in substance in this Recommended Order. Respondents' proposed findings of fact numbered 2, 6, 11-17, 19-22, 30- 36, 43, 46-48, 53, 54, 56, 58, 60, 67 and 68 have been rejected as not constituting findings of fact but rather as constituting argument of counsel, conclusions of law, or recitation of the testimony. Respondents' proposed findings of fact numbered 7, 10, 23, 29, 61, 64, 65, 70, 72, and 75 have been rejected as not being supported by the weight of the evidence in this cause. Respondents' proposed findings of fact numbered 3, 24, 27, 38-41, 44, and 45 have been rejected as being unnecessary to the issues involved herein. Respondents' proposed findings of fact numbered 59, 66, 74, and 76-78 are rejected as being irrelevant to the issues under consideration in this cause. COPIES FURNISHED: Steven W. Johnson, Esquire Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street, Suite N-308A Orlando, Florida 32802-1900 Ofer M. Amir, Esquire Amir & Associates, P.A. 8751 West Broward Boulevard, Suite 500 Plantation, Florida 33324 Darlene F. Keller, Division Director Department of Business and Professional Regulation Division of Real Estate 400 West Robinson Street Orlando, Florida 32802-1900 Jack McRay, Acting General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Tallahassee, Florida 32399-0792
The Issue Whether the Certificate of Registration of the Respondent as a real estate broker should be suspended or revoked For alleged violation of Sections 475.25(1)(a), 475.25(1)(c), 475.25(1)(i), and 475.25(3), Florida Statutes, as alleged in the Administrative Complaint filed February 11, 1976. A final hearing was scheduled to be held on June 29, 1976, but pursuant to Motion of Respondent was continued until July 6, 1976 and, pursuant to a further Motion of Respondent For continuance, the hearing was continued until November 15, 16, 1976. A prehearing Motion of Respondent to strike Counts I, II, III, V, VII, VIII, IX & X of the Administrative Complaint was denied at the commencement of the hearing. At the hearing, Petitioner moved to amend Count X of its Complaint to correct a typographical error as to the statutory provision alleged to have been violated. The Motion was granted and the said Count was amended to reflect an alleged violation of Section 475.25(3), F.S. rather than Section 475.25(1), F.S. Pursuant to further Motion of Petitioner, a typographical error appearing in Count VII of the Administrative Complaint relating to the address of the property in question shown in paragraph 1 thereof was corrected to read "1558". Pursuant to further Motion of petitioner, Count Seven was also amended to include an alleged violation of Section 475.25(1)(i), F.S. No objections to any of the above amendments were made by Respondent.
Findings Of Fact Respondent is a registered real estate broker, Certificate No. Q056337. During the year in which the alleged statutory violations occurred, i.e., 1974, she was also registered under the trade name "Watson Real Estate". Also, effective November 4, 1974, she was additionally registered in the name of Connie B. Martin. Her place of business was listed at 17031 North Dixie Highway, North Miami Beach, Florida. (Petitioner's Exhibits 1, 2) On April 16, 1974, Respondent, in the name of "Connie Martin and/or Nominees" entered into an Agreement of Sale and Deposit Receipt with Richard Infante and Susan Infante, his wife, whereby Respondent agreed to purchase real estate located at 1558 N.W. 102nd Street, Miami, Florida, For the price of $24,607.50. The contract provided For a $1,000.00 security deposit by the purchaser in the Form of a check payable to "Watson Real Estate Trust Account" and the Agreement recited an acknowledgement of receipt of these escrow funds by Constance B. Mastellone For Watson Real Estate. The Agreement further provided that closing of the transaction would be on June 23, 1974 and that, in the event of failure or refusal of the purchaser to comply with the obligations thereunder, without fault on the sellers' part, all monies paid under the contract could be retained by the sellers as liquidated damages. Respondent did not place the $1,000.00 deposit in the Watson Real Estate Trust Account that was maintained in the City National Bank of Miami Beach, Miami Beach, Florida. Instead, she wrote a letter to the Infantes on the same day that the contract was executed advising them that the money was in an interest-bearing account at Chase Federal Savings, North Miami Beach, Florida. The letter stated that she preferred to handle the matter in that manner because there was a possibility she would not be able to obtain financing and close the purchase. Although Respondent testified that Mr. Infante called and told her that he had received the letter and had expressed no objection to this disposition of the funds, no written instrument or addendum to the contract in this respect was ever executed by the parties. (Petitioner's Exhibit 14; Respondent's Exhibit 16). The transaction with the Infantes did not close on the scheduled date because Respondent was unable to obtain mortgage financing. On July 1, 1974, Respondent, in the name of "Connie B. Martin, broker" as seller, entered into a deposit receipt agreement with Carrie Clark, as purchaser to sell the Infante property For the sum of $25,000.00. The deposit receipt reflected that the sum of $1,450.00 was acknowledged to be held in escrow by Watson Real Estate as a deposit on the property. There was no showing in this Agreement that Respondent did not hold title to the property at the time. The contract was contingent upon the delivery by the seller of an FHA appraisal of not less than $25,000.00. The Agreement reflected that "Watson Real Estate, Connie B. Martin, Broker" had received the aForesaid deposit. Under the same date of July 1, 1974, another deposit receipt was executed by Carrie Clark as buyer, whereby "Watson Real Estate Trust Account, Connie B. Martin", acknowledged receipt of $1,450.00 from Carrie Mae Clark on the same property as a deposit to be held in escrow by Watson Real Estate. This document showed the purchase price to be $24,607.50. It did not reflect the name of the proposed seller of the property. At the time she executed these documents, Clark did not know who owned the property in question. Respondent viewed Clark as her "Nominee, as referred to in the original contract with the Infantes, and had contracted with Clark on the assumption that she could deliver clear title to her when she had received the same from the Infantes. Respondent considered this transaction to be what she termed a "double closing". Her original contract with the Infantes provided that she would receive as "Watson Real Estate, Connie B. Martin, Broker", 40 percent of the real estate commission on the sale with 60 percent to be paid to the listing broker, Edwin C. Bagby. (Testimony of Respondent, Clark, Petitioner's Exhibit 8; Respondent's Exhibit 6). During the next several months after June, 1974, Respondent advised Infante and his attorney Benjamin Agronow, that she was endeavoring to sell the house to Clark. Infante was desirous of selling the property and did not press to close the transaction. He hereby tacitly agreed to an extension of the time For closing. However, when the Clark deposit receipt was submitted to Agronow in early November, 1974, he advised Infante that the changed method of financing therein would result in higher costs to him. By this time Infante wanted no further dealings with the Respondent and declined to consider the offer by Clark. Thereafter, on November 12, 1974, Agronow advised the Respondent that she had breached the contract of April 16, 1974 For, failure to close the transaction, and demanded delivery of the $1,000.00 deposit under the terms of the contract. It provided that upon default of the purchaser all monies paid thereunder could be retained by the seller as liquidated damages and the contract terminated. Respondent did not pay over the deposit funds to Infante. (Testimony of Respondent, Agronow, Infante (Deposition), Respondent's Exhibit 6, Petitioner's Exhibit 14). On May 25, 1974, Respondent, in the name of "Connie B. Martin and/or Nominees" as purchaser, entered into an Agreement Of Sale And Deposit Receipt with Ruth E. Higgins, as seller, to purchase property located at 1065 N.W. 127th Street, Miami, Florida, For the sum of $31,000.00. The contract provided For the payment of $1,000.00 in the Form of a check to "Watson Real Estate trust account", escrow agent, as a security deposit, and receipt was acknowledged of this amount on the same date by Constance B. Mastellone For Watson Real Estate Trust Account. The contract further provided that it was a "back-up" contract and would not become effective until the date that Higgins was notified that a previous contract with one Hyde was known to be void. Respondent was advised several months later that the Hyde transaction had failed. Neither the listing broker, Associates Real Estate, nor Higgins saw the $1,000.00 at the time the aForesaid agreement of May 25 was entered into by the parties. A letter of Respondent to Higgins on the same date as the contract was executed stated that Respondent held the deposit of $1,000.00 in her account with Chase Federal Savings, North Miami Beach, Florida, in an interest-bearing account. It further stated that Respondent did not want to lose the interest during the time spent waiting For a mortgage commitment. Respondent testified that Higgins called her on the phone and told her she had received the letter and accepted the provisions thereof. Respondent encountered difficulties in obtaining financing For the purchase due to a tight money market and there was also a title problem to be resolved. In any event, the deal did not go through and Respondent obtained a release of the deposit receipt to herself which was executed by Higgins on December 19, 1974. Respondent admitted at the hearing that at no time was the $1,000.00 deposit ever placed in the Watson Real Estate trust account. (Testimony of Respondent, Higgins, Shaeffer; Petitioner's Exhibit 15; Respondent's Exhibits 8, 10, 11, 12, 13). On December 10, 1974, Respondent's daughter, Pamela A. Mastellone entered into an Agreement Of Sale And Deposit Receipt as purchaser of the Higgins property For the sum of $34,000.00. This agreement provided For a security deposit in the sum of $3,000.00 in the Form of a check payable to Ruth E. Higgins. The check was issued by Connnie Mastellone" on December 10, 1974 and was drawn on the City National Bank of Miami Beach. The contract further provided that if it did not close by December 24, 1974, the contract would be null and void and the parties relieved of all obligations. The agreement provided For an even split of a 7.5 percent commission between Associates Realty and Watson Realty. Respondent testified that at the time she gave the check to Higgins, she asked her to hold it until a firm commitment from a mortgage company had been received. Higgins, on the other hand, testified that Respondent had asked her to hold it For two weeks. Respondent was unable to get mortgage financing For her daughter and the contract expired by its terms on December 24, 1974. On December 27, 1974, Higgins deposited the check For payment and it was returned For insufficient funds. (Testimony of Respondent, Shaeffer; Petitioner's Exhibits 16, 17, 18; Respondent's Exhibit 14). On June 18, 1974, Respondent in the name of "Connie B. Martin" as purchaser entered into an Agreement Of Sale And Deposit Receipt with Rose Gilbert, represented by Jean Fielding, Attorney in fact, to purchase real estate located at 16150 N.E. 12th Avenue, North Miami Beach, Florida, For the price of $26,000.00. The Agreement provided that upon signing of the contract, the purchaser would place $2,00.00 in escrow with Watson Real Estate Trust Account and receipt was acknowledged of this sum by Constance B. Mastellone For Watson Real Estate. The contract provided For a 50-50 commission split between Watson Real Estate and Pete Lipinsky, listing broker. At the time the contract was executed, Lipinsky told Respondent that if she did not place the money in escrow, he would "nail her hide to the wall". Respondent testified that she instructed her daughter, Pamela Mastellone, to go to the Chase National Bank and withdraw $2,100.00 and send the same to the Watson Realty Trust Account at City National Bank of Miami Beach. She further testified that it was not until she was investigated by petitioner that she learned her daughter had neglected to follow her instructions in this regard. The contract did not close on the agreed date and thereafter, on September 20, 1974, Respondent, in the name of "Constance B. Mastellone, Broker" entered into another Agreement Of Sale And Deposit Receipt with Gilbert on the same property For a price of $29,000.00. Although this Agreement provided For a security deposit of $2,600.00 to be placed in the Watson Real Estate Account, the parties understood that these were the same funds deposited under the Former contract. This deal closed on October 14, 1974. (Testimony of Respondent, Fielding, Lipinsky; Petitioner's Exhibits 6, 7; Respondent's Exhibits 1, 2). On May 28, 1974, Peter A. Mastellone and Respondent, in the name of "Constance B. Mastellone, Broker, and/or Nominees" was purchaser entered into an Agreement Of Sale And Deposit Receipt with Roy M. Hall and Kitty H. Hall, his wife, to purchase property located at 1517 N.W. 101st Street, Miami, Florida, For the price of $17,000.00. The contract provided For a $1,000.00 check payable to Watson Real Estate Trust Account as escrow agent as a security deposit, and receipt of the said deposit was acknowledged by Constance B. Mastellone on behalf of Watson Real Estate. The contract further specified that the property was being purchased For the purpose of resale and provided For a closing within 30 days. The contract provided that there would be no real estate commission paid on the transaction. Also, on May 28, 1974, Respondent directed letters to the Halls advising them that the $1,000.00 security deposit was in her account at Chase Federal Savings, North Miami Beach, an interest- bearing account, and that she did not want to place it in an escrow account where it would earn no interest. Respondent testified that the Halls orally agreed the deposit money could stay in the savings account of Respondent. This contract did not close, but on August 9, 1974, Respondent executed an FHA deposit receipt as seller whereby she agreed to sell the property to Nicholas Torek and Mary McDonnell Torek For the sum of $23,000.00. The document acknowledged the receipt of a $500.00 security deposit, which was in the Form of a check issued to Watson Real Estate by M.L. McDonnell on August 11, 1974, to be placed in the Watson Real Estate Account. Respondent was unaware at the time that McDonnell and Torek were not married. Torek had authorized McDonell to use his name on the instrument because they were planning to be married. Respondent sent them to a mortgage company to qualify For a mortgage. Several days later, she learned that they were not married and Torek came back and signed a new contract, which was also dated August 9, with the Halls at the same purchase price as his contract with Respondent. The latest agreement provided For a security deposit of $1,250.00 to be held in escrow by Watson Real Estate Trust Account and also provided For a real estate commission to Watson Real Estate of $3,750.00 to be paid by the Halls. An addendum to this contract was executed by Torek and Respondent, dated August 9, 1974, whereby Torek agreed that the $1,250.00 escrow should not be deposited in the trust account, but be given to Peter A. Mastellone For the purpose of making repairs on the property. It further provided that he would hold $850.00 toward closing costs and "prepayables". The document reflects the receipt of $2,100.00 by Peter A. Mastellone. Respondent testified that since $2,100.00 was all that was necessary to close the transaction, her husband returned $500.00 cash to Torek to reimburse McDonnell For her original deposit on the other contract. The Halls were not a party to the addendum to the contract and Torek was not aware that the Halls were the owners of the property until after the transaction was closed on October 4, 1974. Torek testified that he had not signed the second August 9 contract which had been executed by the Halls. However, Torek had agreed to close in his own name when he learned that McDonnell could not qualify For FHA financing. Torek was not concerned about the name in which the transaction was consummated but later, after disputes with McDonnell, quitclaimed his interest to her. Although McDonnell was present at the closing on October 4, the deed to the property was issued in the name of Torek only. McDonnell testified that Respondent had told her to sign the original contract In the name of Torek and in that way the deed would come out in her married name. McDonnell was surprised when the deed was issued only in the name of Torek. McDonnell was aware that the Halls owned the property and that Respondent was attempting to sell it in order to get out from under her own contract with the Halls. McDonnell was not aware that Torek had signed the subsequent agreement in his name only. (Testimony of Respondent, Torek, McDonnell, Petitioner's Exhibits 10, 11, 12, 13; Respondent's Exhibits 5 & 20).
Recommendation That the registration of Constance B. Mastellone as a real estate broker be suspended For a period of six months For violation of subsections 475.25(1)(a), 475.25(1)(c), and 475.25 (1)(i), Florida Statutes. DONE and ENTERED this 3rd day of January, 1977, in Tallahassee, Florida. THOMAS C. OLDHAM Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Manuel E. Oliver, Esquire Staff Attorney Florida Real Estate Commission 2699 Lee Road Winter Park, Florida James, A. Baccus, Esquire Attorney For Respondent Triangle Building 595 N.W. 91st Street Miami, Florida 33150 ================================================================= AGENCY FINAL ORDER ================================================================= FLORIDA REAL ESTATE COMMISSION ANATOL ARIAN, Petitioner, PROGRESS DOCKET NO. 2788 vs. DADE COUNTY DOAH NO. 76-472 CONSTANCE B. MASTELLONE, Respondent. /
